Multi-Dealer Select is the website capability giving consumers an option to request a quote from more than one dealer simultaneously. Consumers want the best price, so when offered the choice, they are motivated to request multiple quotes. Why is this increasingly popular option so important to you? Because facts show that as more and more consumers shop online at third-party sites, OEMs gain a solid opportunity to improve close rates — and more importantly, to lower the cost per sale.
A Closer Look
Although a vast majority of OEMs have now implemented a multi-select model with one or more of their third-party lead providers, this is a recent development. OEMs, however, have not yet offered the option on their native websites. Data shows that customers submit leads to approximately two dealers when shopping for a vehicle, which suggests that it is important for them to have comparisons. Just as important, dealers are driven to become more responsive — and to further differentiate themselves — if they know others have also received the lead. So the question is, should “multi-dealer select” functionality be made available on OEM websites?
The facts show that if customers submit multiple leads, close rates increase. There are four scenarios by which consumers submit leads:
- Single Lead, Single Dealer: Lead sent to one dealer within a 90-day window, regardless of source.
- Multiple Leads, Single Select: Multiple leads sent via a single source within a 90-day window. Consumer did not make another submission using Multi-Dealer Select.
- Multiple Leads, Single & Multi Select: Leads sent via a single source and via a Multi-Dealer Select source within a 90-day window.
- Multiple Leads, Multi Select Only: Leads sent via Multi-Dealer Select within 90-day window. Consumer did not also make another submission using single select.
Close rates increase when leads are submitted to more than one dealer. While up to five dealers are typically displayed on a third-party website, consumers are usually limited to submitting a lead to two or three dealers. In the example below, 37% of consumers submitted a lead to more than one dealer, and nearly all of them used a Multi-Dealer Select source (shown in orange and blue bars).
While lead submissions to more than one dealer result in higher close rates, the key factor when considering a Multi-Dealer Select model is cost per sale.
Consider a lead that costs $20:
100 valid leads are delivered using a Single-Source model resulting in 100 unique leads. Using the 6% close rate in the chart above for leads submitted via single select source, this results in a cost per sale of $333.
Now consider a Multi-Dealer Select source that allows lead submissions to two dealers. In this example, 200 leads are delivered, but still results in 100 unique leads. Using the 17% close rate above for multiple leads sent to two dealers, the cost per sale is now $235.
So, even though $2,000 more was spent to acquire the additional leads, the higher close rate and lower cost per sale makes Multi-Dealer Select an attractive option. This data will change over time and will not apply to each OEM in a uniform way. Therefore, it is important that this analysis should be a key part of determining the impact of Multi-Dealer Select on your cost per sale and sales volumes for your program.
Getting it Right
It is important to assess the impact of Multi-Dealer Select from every lead source. Not all leads are created equal, and finding the right balance of the number of dealers for consumers to select from one source to the other will help optimize close rates and cost per sale.
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